October 2018
Featured in this insight: Financial services
Poor budgeting reason most people fall behind with debt: A survey has found that credit cards are the main cause of debt in the UK and poor budgeting is the number one reason why people fall behind with repayments.
When questioned about why they had been unable to make repayments respondents pointed to poor budgeting (32%), reduced earnings (28%) as well as borrowing too much money in the first place (22%).
The poll of over 2,000 UK adults who had some level of debt found that younger people are more likely to clear their debt in full each month, with 22% of 18–24 year-olds successfully returning their balance to zero each month. This compares to 43% of 25–34 year olds. The likelihood of not paying the balance in full each month is even greater for 45–54 year olds (69%) and those over 55 (68%).
Of all the forms of credit, credit cards emerged as the source that most people ran into trouble with in terms of paying them off when scheduled to do so. Over half of those polled (51%) said they had struggled to make a scheduled payment to a credit card compared to 24 percent who said the same for overdrafts and unsecured personal loans (18%).
High earners blamed poor budget management for failing to get back into the black with 50% earning above 55,001 – 75,000 saying this was the premier reason – along with 56% of those earning £75,000 plus.
Arrow Global group chief executive Lee Rochford said: “It’s clear from this research that many consumers persistently struggle with their debt obligations. While some factors are clearly outside their control, such as redundancy and illness, this research shows that better budgetary management would stop some people, including those on higher incomes, from falling into unsustainable debt."
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